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Latha Venkatraman

Shanghai. Oct. 23

THE Asia Pacific region will be the main driver for Royal Philips Electronics in the coming years and the Netherlands-based multinational company is making investments in the area of research and development.

The Asia Pacific region, according to Mr Andreas Wente, President & CEO, Royal Philips Electronics, is where Philips' new plans and businesses will focus. "Our target for the future is to earn one-third of our total revenues from the region by 2008,'' Mr Wente said.

During 2003, 25 per cent of the company's sales came from the Asia Pacific region. During the first half of 2004, the company's growth in the region was higher by 23 per cent year-on-year. The economic development in this region was the main reason for Philips to look at the Asia Pacific market for investment. In terms of workforce, Asia already accounts for one third of the company's entire workforce. "We are actively developing local talent for high value R&D work,'' he said.

Philips is increasingly moving towards R&D in its transition from a traditional manufacturing company. "Going forward our focus will be on R&D. We do not have huge plans for increasing manufacturing facilities,'' Mr Andreas Wente, President & CEO, Royal Philips Electronics, Asia Pacific, told visiting journalists at the Philips Asian Technology Media Event.

The company's R&D thrust with spend of nine per cent of sales also calls attention to its increased focus in the Asia Pacific region. The technology growth in the region is significant particularly in countries like China where Philips has 20 joint ventures in place and 15 R&D centres.

Looking at a greater thrust on R&D, Philips has launched InnoHub, an integrated test bed facility to test and finetune products developed at the Philips Innovation Campus in Singapore.

InnoHub has been introduced as a part of its $ 90-million investment in Singapore in a bid to accelerate its Connected Planet strategy, wherein it introduces products with seamless connectivity.

Asia is not only a manufacturing and a technology hub for Philips, but also a huge market, according to Mr Wente. The company, he says, is looking at Asia seriously and has been developing products that are specific to its consumer needs in all the areas — healthcare, lifestyle and technology.

In the Asian market, China is clearly an important geography for Philips as is evident in the campaign of its new brand pledge, `Sense and Simplicity', moving away from its earlier campaign, `Lets Make Things Better'. The new campaign has been launched in five countries.

Mr Wente believes that Philips could replicate the China model elsewhere in the region but maintained that the existing manufacturing facilities would continue; outsourcing could be a possibility in semi-conductors.

In terms of business, healthcare will emerge as a major driver for Philips. In this business too, China will surface as a major market for healthcare products. Currently, healthcare represents 25 per cent of Philips' turnover worldwide but not in the Asia Pacific region. The biggest market now is the US followed by Japan.

Indian unit aims to double turnover

PHILIPS India Ltd, bolstered by a sustained quarter growth, has set a target to double its turnover from Rs 2,500 crore to Rs 5,000 crore by 2007. This growth will not necessitate investment in manufacturing facilities, Mr K. Ramachandran, Vice-Chairman and Managing Director, Philips India, said.

In China, the company has set a turnover target of $ 12 billion by 2007 compared to $ 7.5 billion in 2003. Philips China's contribution to the worldwide organisation is 10 per cent.

More Stories on : Outlook | Consumer Electronics

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